Russell Investments sold for $2.8 billion to B Capital-led group

B Capital and CalPERS are buying Russell Investments for $2.8 billion, betting AI can reshape retirement investing.

B Capital Group and the California Public Employees' Retirement System agreed to acquire Russell Investments for about $2.8 billion, wagering that artificial intelligence can modernize how the 90-year-old asset manager serves retirement savers.

"We've always believed that the way people save and invest for retirement can be improved by leveraging AI," Raj Ganguly, co-chief executive officer at B Capital, said in an interview. "But you can't remove the human element from it."

The deal values the Seattle-based firm at roughly 2.4 times the $1.15 billion that TA Associates Management and Reverence Capital Partners paid in 2016, when Russell managed about $270 billion. Today, the firm oversees $416 billion in assets and has grown organically by more than 15 percent over the past two years, a pace that outstrips many publicly traded rivals.

The acquisition comes as asset managers race to combine for scale, expand into private and alternative assets and invest in technology to reach more clients. For CalPERS, which managed $634 billion as of July 7, the deal offers a direct stake in building what Deputy Chief Investment Officer Anton Orlich called "a next-generation asset manager." The transaction is expected to close in the first quarter of 2027, pending regulatory approvals.

Russell Investments will continue to operate independently under its existing leadership, the company said. Chief Executive Officer Zach Buchwald and President and Chief Investment Officer Kate El-Hillow will remain in their roles, with no changes planned for investment teams or client-facing staff.

The deal marks the fourth change in ownership for the firm since 2014, when the London Stock Exchange Group bought Frank Russell Company's index and money-management businesses. LSEG kept the index unit and sold the asset management arm to TA Associates and Reverence Capital in 2016.

A Bet on Technology

B Capital, co-founded by Facebook billionaire Eduardo Saverin and former Bain Capital investor Raj Ganguly, had considered investing in asset management for some time after finding that investors are "systematically underserved" in retirement and personal investing, Ganguly said. The firm decided against backing a startup or robo-advisory business that lacked longstanding client relationships.

Russell plans to use the new backing to expand its outsourced chief investment officer business, portfolio implementation services and self-directed investing platform. The OCIO business is one of the industry's largest, offering pension plans and other large investors advice on how to oversee their portfolios.

The sale follows a separate financing move six months earlier. In January, Russell completed a $1.225 billion refinancing arranged by Apollo, extending its debt maturities by seven years without altering its ownership structure.

This article is for informational purposes only and does not constitute investment advice.